(VOVWORLD) - The African Continental Free Trade Agreement (AfCFTA) has received approval from 22 African nations, just enough to come into force. The agreement will create one of the world’s largest trading blocs.
 The African Continental Free Trade Agreement (AfCFTA) is expected to reduce poverty in Africa (Photo: hanoimoi.com.vn) |
On Tuesday, Gambia passed the African Continental Free Trade Agreement, becoming the 22nd African nation to do so and marking the legal threshold for the agreement to come into force. The pact will remove tariffs on 90% of goods and cover a market of more than 1 billion people and a combined GDP of 3 trillion USD.
Regional growth and connectivity breakthrough
Last month, 49 of Africa’s 55 countries signed the Free Trade Agreement aimed at boosting intra-Africa trade by 52% in 2022.
The agreement came at a time when world powers have grown skeptic about free trade. Experts estimate that the intra-African and African regional export rate increased from 10% in 1995 to 17% in 2017, still lower than the rates of other continents. The UN Economic Commission for Africa (ECA) predicts that AfCFTA will be a trump card to boost intra-bloc trade, whose value may increase 15% to 25%, equivalent to 50-70 billion USD, compared with pre-AfCFTA figures.
The AfCFTA goes beyond traditional free trade agreements, which ussualy concentrates on trading of goods, services, investment, intellectual property rights, competitiveness policies, and e-commerce. AfCFTA entails other initiatives, including free movement of people, goods, and services, and promotes the development of small and medium-sized enterprises, which create 80% of Africa’s jobs and 50% of its GDP.
Seizing opportunities
Large income gap between countries is a big obstacle to achieving the goals of the agreement. Egypt, Nigeria, and South Africa account for more than half of Africa’s GDP. Nonetheless, the African Continental Free Trade Agreement is expected to drive growth and diversify economies.